Original Cost

The original cost of an asset is the price paid to acquire it. This is the basis for calculating depreciation, which is the decrease in value of an asset over time. The original cost of an asset can be used to determine its book value, which is its value on the company's balance sheet.

The original cost of an asset can be affected by a number of factors, including inflation, taxes, and interest. Inflation can increase the cost of an asset over time, while taxes and interest can reduce its value. The original cost of an asset is also affected by the depreciation method used.

There are a number of different depreciation methods that can be used, each with its own advantages and disadvantages. The most common depreciation method is the straight-line method, which allocates an equal amount of depreciation to each year of an asset's useful life. Other depreciation methods include the declining balance method, the sum-of-the-years' digits method, and the unit-of-production method.

The original cost of an asset is an important financial concept that can be used to determine its value, depreciation, and book value. The original cost of an asset can be affected by a number of factors, and the depreciation method used can also impact its value.